99.1
|
Press Release dated October 24, 2014, reporting Shire plc’s financial results for the three month period ended September 30, 2014.
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SHIRE PLC
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||||
By:
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/s/ T May
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|||
Name: | Tatjana May | |||
Title: | General Counsel |
EXHIBIT INDEX
|
||
Number
|
Description
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|
99.1
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Press Release dated October 24, 2014
|
Press Release
|
|
www.shire.com
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Financial Highlights
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Q3 2014
|
Growth(1)
|
|
Product sales
|
$1,552 million
|
+33%(2)
|
|
Total revenues
|
$1,597 million
|
+32%
|
|
|
|
|
|
Non GAAP operating income
|
$717 million
|
+60%
|
|
US GAAP operating income from continuing operations
|
$572 million
|
+49%
|
|
|
|
|
|
Non GAAP EBITDA margin (excluding royalties & other revenues)(3)
|
46%
|
n/a
|
|
US GAAP net income margin(4)
|
30%
|
n/a
|
|
|
|
|
|
Non GAAP diluted earnings per ADS
|
$2.93
|
+60%
|
|
US GAAP diluted earnings per ADS
|
$2.43
|
+66%
|
|
|
|
|
|
Non GAAP cash generation
|
$612 million
|
+27%
|
|
Non GAAP free cash flow
|
$575 million
|
+48%
|
|
US GAAP net cash provided by operating activities
|
$593 million
|
+37%
|
|
|
|
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·
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Generated record quarterly product sales of $1,552 million, growing at 33%
|
·
|
Grew Non GAAP diluted earnings per ADS by 60%, and
|
·
|
Delivered Non GAAP cash generation of over $600 million.
|
|
|
Q3 2014
|
|
|
Q3 2013
|
|
||||||||
|
US GAAP
|
Adjustments
|
Non GAAP
|
|
US GAAP
|
Adjustments
|
Non GAAP
|
|
||||||
|
|
$M
|
|
$M
|
|
$M
|
|
|
$M
|
|
$M
|
|
$M
|
|
Total revenues
|
|
1,597
|
|
-
|
|
1,597
|
|
|
1,213
|
|
-
|
|
1,213
|
|
Operating income
|
|
572
|
|
145
|
|
717
|
|
|
383
|
|
66
|
|
449
|
|
Diluted earnings per ADS
|
|
$2.43
|
|
$0.50
|
|
$2.93
|
|
|
$1.46
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|
$0.37
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|
$1.83
|
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·
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Product sales grew strongly in Q3 2014, up 33% to $1,552 million (Q3 2013: $1,171 million). Product sales in Q3 2014 included $153 million for products acquired with ViroPharma Incorporated (“ViroPharma”), primarily $145 million from CINRYZE®. The inclusion of ViroPharma contributed 14% to reported product sales growth in the quarter.
|
·
|
Total revenues were up 32% to $1,597 million (Q3 2013: $1,213 million).
|
·
|
On a Non GAAP basis:
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2 |
·
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Non GAAP diluted earnings per American Depository Share (“ADS”) increased 60% to $2.93 (Q3 2013: $1.83) as a result of higher Non GAAP operating income and a lower Non GAAP effective tax rate of 18% in Q3 2014 (Q3 2013: 20%).
|
·
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Cash generation, a Non GAAP measure, was up 27% to $612 million (Q3 2013: $482 million) reflecting higher receipts from product sales and lower operating expense payments. Cash generation in Q3 2014 was held back by payments of $59 million in respect of the final agreement with the US Government relating to previously disclosed civil investigations, as well as payments in respect of the One Shire reorganization, AbbVie’s terminated offer for Shire and the integration of ViroPharma.
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·
|
Net debt, also a Non GAAP measure, was $396 million at September 30, 2014 (December 31, 2013: net cash of $2,231 million).
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3 |
·
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On September 26, 2014 Shire was granted a marketing authorization by the Ministry of Health, Labour and Welfare in Japan for AGRYLIN® (1) in adult essential thrombocythaemia patients.
|
·
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On September 2, 2014 Shire launched VPRIV® in Japan, for the improvement of symptoms of Gaucher disease, following approval of a marketing authorization on July 4, 2014 by the Ministry of Health, Labor and Welfare in Japan.
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·
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On September 15, 2014 Shire announced that the US Food and Drug Administration (“FDA”) has accepted for filing with priority review a supplemental New Drug Application (“sNDA”) for VYVANSE as a treatment for adults with BED. The FDA is expected to provide a decision in February 2015, based on the anticipated Prescription Drug User Fee Act action date.
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·
|
On October 17, 2014 Shire submitted an Investigational New Drug (“IND”) application for SHP607 with the FDA. The IND is subject to a 30-day review period.
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·
|
On October 9, 2014 Shire announced that it has received further guidance from the FDA on the regulatory path for SHP465, an investigational oral stimulant medication being evaluated as a potential treatment for ADHD in adults. This information will impact Shire’s plans for a 2014 New Drug Application (“NDA”) resubmission for SHP465.
|
·
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SHP620 was acquired as part of the acquisition of ViroPharma in Q1 2014. Shire is currently conducting two Phase 2 studies in transplant recipients, both of which are fully enrolled. The first is a trial in first-line treatment of asymptomatic CMV in transplant recipients. The results showed that maribavir, at all doses, was at least as effective as valganciclovir in the reduction of circulating CMV to below the limits of assay detection (undetectable CMV). The second study is a trial for the treatment of resistant/refractory CMV infection/disease in transplant recipients. The purpose of this study is to determine whether maribavir is efficacious and safe in patients with clinically refractory disease to standard of care CMV therapy (e.g., valganciclovir, foscarnet) with or without genotypic resistance to those agents. Preliminary results are expected in early 2015. This product has been granted orphan drug designation in both the US and EU.
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·
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On October 20, 2014 Shire announced that James Bowling, Interim Chief Financial Officer (“CFO”), had notified the Board of Directors of his decision to step down from his current role to pursue a new career opportunity. James will leave Shire at the end of Q1 2015 and Shire has commenced a search for a new CFO.
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4 |
·
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On October 15, 2014 the Board of AbbVie confirmed that it had withdrawn its recommendation of its offer for Shire as a result of the anticipated impact of the US Treasury Notice on the benefits that AbbVie expected from its offer. As AbbVie’s offer was conditional on the approval of its stockholders, and given their Board’s decision to change its recommendation and to advise AbbVie’s stockholders to vote against the offer, there was no realistic prospect of satisfying this condition. Accordingly, Shire’s Board agreed with AbbVie to terminate the cooperation agreement on October 20, 2014. The UK Takeover Panel has confirmed that the offer period has ended. Shire has entered into a termination agreement with AbbVie, pursuant to which AbbVie has paid the break fee under the cooperation agreement of approximately $1.635 billion.
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·
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On September 30, 2014 Shire sold its rights to EXPUTEX® to Phoenix Labs along with other specified assets.
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·
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On August 1, 2014 Shire sold its rights to VANCOCIN® to ANI Pharmaceuticals Inc. along with other specified assets.
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·
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On July 17, 2014 Shire sold its rights to ESTRACE® to Trimel Pharmaceuticals Inc. along with other specified assets.
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·
|
On July 23, 2014 Shire and ArmaGen, a US-based privately held biotechnology company, announced a worldwide licensing and collaboration agreement to develop and commercialize AGT-182, an investigational enzyme replacement therapy for the potential treatment of both the central nervous system and somatic manifestations in patients with Hunter syndrome. This collaboration strengthens Shire’s rare disease pipeline of innovative therapies where there is high unmet need, and underscores Shire’s long standing commitment to the Hunter syndrome community.
|
·
|
On July 9, 2014 Shire acquired BIKAM, a US-based privately held biotechnology company. The lead asset, SHP630 (formerly BIK-406), is in pre-clinical development for the potential treatment of autosomal dominant retinitis pigmentosa.
|
·
|
On September 24, 2014 Shire announced that it had resolved all matters with the US federal government, the 50 states and the District of Columbia relating to a previously disclosed civil investigation of its US sales and marketing practices relating to ADDERALL XR®, VYVANSE, DAYTRANA®, LIALDA and PENTASA®. The investigation was led by the US Attorney’s Office for the Eastern District of Pennsylvania. Under the agreement, Shire has paid $56.5 million, and interest, fees, and costs, to resolve all issues investigated by the government. This final settlement includes the resolution of two related qui tam complaints filed against Shire and a voluntary disclosure relating to LIALDA and PENTASA. In addition, Shire has paid $2.9 million to resolve a previously disclosed civil complaint filed by the State of Louisiana alleging that Shire’s sales, marketing, and promotion of ADDERALL, ADDERALL XR, DAYTRANA, VYVANSE and INTUNIV® violated state law. Shire recorded a $57.5 million provision related to these matters which was charged to SG&A in the fourth quarter of 2012. As part of the resolution, Shire has entered into a Corporate Integrity Agreement with the Office of Inspector General for the Department of Health and Human Services for a term of five years.
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5 |
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Page
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Overview of Third Quarter 2014 Financial Results
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7
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Financial Information
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11
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Non GAAP Reconciliation
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20
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Notes to Editors
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25
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Safe Harbor Statement
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26
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Explanation of Non GAAP Measures
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27
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Trade Marks
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28
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Investor Relations
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|
|
|
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- Jeff Poulton
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jpoulton@shire.com
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+1 781 482 0945
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- Sarah Elton-Farr
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seltonfarr@shire.com
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+44 1256 894 157
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Media
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- Stephanie Fagan
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sfagan@shire.com
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+1 781 482 0460
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- Gwen Fisher
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gfisher@shire.com
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+1 484 595 9836
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UK dial in: | 0808 237 0030 or 0203 139 4830 |
US dial in: |
1 866 928 7517 or 1 718 873 9077
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International Access Numbers:
|
Click here
|
Password/Conf ID: |
40489933#
|
Live Webcast: | Click here |
6 |
1.
|
Product sales
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|
|
|
Year on year growth
|
US Exit Market Share(3)
|
||||||
Product sales(1)
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Sales $M
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|
|
Sales
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Non GAAP CER(2)
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US Rx(3)
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|
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|
||||
VYVANSE
|
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354.9
|
|
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+19%
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+19%
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+5%
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16%
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LIALDA/MEZAVANT
|
|
176.6
|
|
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+24%
|
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+24%
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+22%
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32%
|
ELAPRASE
|
|
168.8
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|
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+31%
|
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+33%
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n/a(5)
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|
n/a(5)
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CINRYZE(4)
|
|
145.1
|
|
|
n/a
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|
n/a
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|
n/a(5)
|
|
n/a(5)
|
REPLAGAL
|
|
135.9
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|
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+25%
|
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+27%
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n/a(6)
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n/a(6)
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FIRAZYR
|
|
98.4
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|
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+57%
|
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+57%
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|
n/a(5)
|
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n/a(5)
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INTUNIV
|
|
96.7
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|
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+20%
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+20%
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+0%
|
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4%
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VPRIV
|
|
96.4
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|
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+10%
|
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+10%
|
|
n/a(5)
|
|
n/a(5)
|
ADDERALL XR
|
|
95.3
|
|
|
+17%
|
|
+17%
|
|
+12%
|
|
5%
|
PENTASA
|
|
78.3
|
|
|
+11%
|
|
+11%
|
|
-5%
|
|
13%
|
OTHER
|
|
105.6
|
|
|
-3%
|
|
-5%
|
|
n/a
|
|
n/a
|
Total
|
|
1,552.0
|
|
|
+33%
|
|
+33%
|
|
|
||
|
|
|
|
|
|
|
|
(1)
|
Product sales from continuing operations, including ViroPharma acquired January 24, 2014, and excluding DERMAGRAFT which has been treated as discontinued operations following divestment on January 17, 2014.
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(2)
|
On a Constant Exchange Rate (“CER”) basis, which is a Non GAAP measure.
|
(3)
|
Data provided by IMS Health National Prescription Audit (“IMS NPA”) relates solely to US-based prescriptions. Exit market share represents the average monthly US market share in the month ended September 30, 2014.
|
(4)
|
CINRYZE product sales in Q3 2014 were up 36% on Q3 2013. Q3 2013 sales were recorded by ViroPharma, prior to the acquisition of ViroPharma by Shire.
|
(5)
|
IMS NPA Data not available.
|
(6)
|
Not sold in the US in Q3 2014.
|
7 |
2.
|
Royalties
|
|
|
|
|
|
Year on year growth
|
||||
Product
|
|
Royalties to Shire
$M
|
|
|
Royalties
|
|
|
CER
|
|
|
|
|
|
|
|
|
|
|
|
FOSRENOL®
|
1.00
|
14.6
|
|
|
+6%
|
|
|
+6%
|
|
ADDERALL XR
|
1.00
|
9.5
|
|
|
+53%
|
|
|
+53%
|
|
3TC® and ZEFFIX®
|
1.00
|
8.8
|
|
|
-13%
|
|
|
-13%
|
|
Other
|
1.00
|
7.0
|
|
|
-7%
|
|
|
-7%
|
|
Total
|
1.00
|
39.9
|
|
|
+6%
|
|
|
+6%
|
|
|
|
|
|
|
|
|
|
|
8 |
3.
|
Financial details
|
|
Q3 2014
|
|
% of
product
sales
|
|
Q3 2013
|
|
% of
product
sales
|
|
$M
|
|
|
$M
|
|
||
Cost of product sales (US GAAP)
|
254.3
|
|
16%
|
|
180.5
|
|
15%
|
Unwind of ViroPharma inventory fair value step-up
|
(18.1)
|
|
|
|
-
|
|
|
Depreciation
|
(16.9)
|
|
|
|
(10.2)
|
|
|
Cost of product sales (Non GAAP)
|
219.3
|
|
14%
|
|
170.3
|
|
15%
|
|
|
|
|
|
|
|
|
|
Q3 2014
|
|
% of
product
sales
|
|
Q3 2013
|
|
% of
product
sales
|
|
$M
|
|
|
$M
|
|
||
R&D (US GAAP)
|
228.6
|
|
15%
|
|
226.2
|
|
19%
|
Payments in respect of in-licensed and acquired products
|
(12.5)
|
|
|
|
-
|
|
|
Depreciation
|
(6.1)
|
|
|
|
(6.3)
|
|
|
R&D (Non GAAP)
|
210.0
|
|
14%
|
|
219.9
|
|
19%
|
|
|
|
|
|
|
|
|
Q3 2014
|
|
% of
product
sales
|
|
Q3 2013
|
|
% of
product
sales
|
|
$M
|
|
|
$M
|
|
|||
SG&A (US GAAP)
|
522.9
|
|
34%
|
|
396.3
|
|
34%
|
Intangible asset amortization
|
(62.9)
|
|
|
|
(34.5)
|
|
|
Legal and litigation costs
|
(3.3)
|
|
|
|
(4.7)
|
|
|
Costs incurred in connection with AbbVie’s terminated offer for Shire
|
(28.4)
|
|
|
|
-
|
|
|
Depreciation
|
(20.7)
|
|
|
|
(15.9)
|
|
|
SG&A (Non GAAP)
|
407.6
|
|
26%
|
|
341.2
|
|
29%
|
|
|
|
|
|
|
|
9 |
10 |
|
Page
|
|
|
Unaudited US GAAP Consolidated Balance Sheets
|
12
|
|
|
Unaudited US GAAP Consolidated Statements of Income
|
13
|
|
|
Unaudited US GAAP Consolidated Statements of Cash Flows
|
15
|
|
|
Selected Notes to the Unaudited US GAAP Financial Statements
|
|
(1) Earnings per share
|
17
|
(2) Analysis of revenues
|
18
|
|
|
Non GAAP reconciliation
|
20
|
11 |
|
September 30,
|
December 31,
|
||||||
|
2014
|
2013
|
||||||
|
$M | $M | ||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
467.7 | 2,239.4 | ||||||
Restricted cash
|
54.5 | 22.2 | ||||||
Accounts receivable, net
|
1,079.3 | 961.2 | ||||||
Inventories
|
548.9 | 455.3 | ||||||
Assets held for sale
|
- | 31.6 | ||||||
Deferred tax asset
|
315.3 | 315.6 | ||||||
Prepaid expenses and other current assets
|
402.4 | 263.0 | ||||||
|
||||||||
Total current assets
|
2,868.1 | 4,288.3 | ||||||
|
||||||||
Non-current assets:
|
||||||||
Investments
|
46.8 | 31.8 | ||||||
Property, plant and equipment ("PP&E"), net
|
845.6 | 891.8 | ||||||
Goodwill
|
2,373.7 | 624.6 | ||||||
Other intangible assets, net
|
5,227.4 | 2,312.6 | ||||||
Deferred tax asset
|
136.7 | 141.1 | ||||||
Other non-current assets
|
42.2 | 32.8 | ||||||
|
||||||||
Total assets
|
11,540.5 | 8,323.0 | ||||||
|
||||||||
LIABILITIES AND EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable and accrued expenses
|
1,725.8 | 1,688.4 | ||||||
Other current liabilities
|
276.6 | 119.5 | ||||||
|
||||||||
Total current liabilities
|
2,002.4 | 1,807.9 | ||||||
|
||||||||
Non-current liabilities:
|
||||||||
Long term borrowings
|
850.0 | - | ||||||
Deferred tax liability
|
1,378.2 | 560.6 | ||||||
Other non-current liabilities
|
771.6 | 588.5 | ||||||
|
||||||||
Total liabilities
|
5,002.2 | 2,957.0 | ||||||
|
||||||||
Equity:
|
||||||||
Common stock of 5p par value; 1,000 million shares authorized; and 598.6 million shares issued and outstanding (2013: 1,000 million shares authorized; and 597.5 million shares issued and outstanding)
|
58.7 | 58.6 | ||||||
Additional paid-in capital
|
4,302.0 | 4,186.3 | ||||||
Treasury stock: 10.8 million shares (2013: 13.4 million)
|
(350.8 | ) | (450.6 | ) | ||||
Accumulated other comprehensive income
|
30.8 | 110.2 | ||||||
Retained earnings
|
2,497.6 | 1,461.5 | ||||||
|
||||||||
Total equity
|
6,538.3 | 5,366.0 | ||||||
|
||||||||
Total liabilities and equity
|
11,540.5 | 8,323.0 |
12 |
3 months to September 30,
|
9 months to September 30,
|
|||||||||||||||
2014
|
2013
|
2014
|
2013
|
|||||||||||||
$M | $M | $M | $M | |||||||||||||
Revenues:
|
||||||||||||||||
Product sales
|
1,552.0 | 1,171.0 | 4,329.7 | 3,477.1 | ||||||||||||
Royalties
|
39.9 | 37.6 | 101.4 | 112.4 | ||||||||||||
Other revenues
|
5.2 | 4.1 | 14.9 | 18.8 | ||||||||||||
Total revenues
|
1,597.1 | 1,212.7 | 4,446.0 | 3,608.3 | ||||||||||||
Costs and expenses:
|
||||||||||||||||
Cost of product sales
|
254.3 | 180.5 | 760.8 | 492.2 | ||||||||||||
R&D(1)
|
228.6 | 226.2 | 826.0 | 703.3 | ||||||||||||
SG&A(1)
|
522.9 | 396.3 | 1,449.4 | 1,198.0 | ||||||||||||
Goodwill impairment charge
|
- | - | - | 7.1 | ||||||||||||
Gain on sale of product rights
|
(46.0 | ) | (3.6 | ) | (86.2 | ) | (14.6 | ) | ||||||||
Reorganization costs
|
28.2 | 12.0 | 123.4 | 47.2 | ||||||||||||
Integration and acquisition costs
|
37.1 | 18.4 | 155.8 | 39.9 | ||||||||||||
Total operating expenses
|
1,025.1 | 829.8 | 3,229.2 | 2,473.1 | ||||||||||||
Operating income from continuing operations
|
572.0 | 382.9 | 1,216.8 | 1,135.2 | ||||||||||||
Interest income
|
3.6 | 0.4 | 22.8 | 1.6 | ||||||||||||
Interest expense
|
(6.8 | ) | (9.2 | ) | (25.7 | ) | (27.5 | ) | ||||||||
Other income/(expense), net
|
6.8 | 0.7 | 14.8 | (1.6 | ) | |||||||||||
Total other income/(expense), net
|
3.6 | (8.1 | ) | 11.9 | (27.5 | ) | ||||||||||
Income from continuing operations before income taxes and equity in earnings/(losses) of equity method investees
|
575.6 | 374.8 | 1,228.7 | 1,107.7 | ||||||||||||
Income taxes
|
(61.2 | ) | (73.4 | ) | 64.7 | (235.3 | ) | |||||||||
Equity in earnings/(losses) of equity method investees, net of taxes
|
1.4 | (0.3 | ) | 3.8 | 0.6 | |||||||||||
Income from continuing operations, net of tax
|
515.8 | 301.1 | 1,297.2 | 873.0 | ||||||||||||
Loss from discontinued operations, net of taxes
|
(36.1 | ) | (22.9 | ) | (64.0 | ) | (271.9 | ) | ||||||||
Net income
|
479.7 | 278.2 | 1,233.2 | 601.1 |
(1)
|
R&D includes intangible asset impairment charges of $188.0 million for the nine months to September 30, 2014 (2013: $19.9 million). SG&A costs include amortization charges of intangible assets relating to intellectual property rights acquired of $62.9 million for the three months to September 30, 2014 (2013: $34.5 million) and $181.9 million for the nine months to September 30, 2014 (2013: $106.5 million).
|
13 |
3 months to September 30,
|
9 months to September 30,
|
|||||||||||||||
2014
|
2013
|
2014
|
2013
|
|||||||||||||
Earnings per Ordinary Share – basic
|
|
|
|
|
||||||||||||
Earnings from continuing operations
|
87.8c | 54.9c | 221.3c | 158.8c | ||||||||||||
Loss from discontinued operations
|
(6.1c) | (4.2c) | (10.9c) | (49.5c) | ||||||||||||
Earnings per Ordinary Share – basic
|
81.7c | 50.7c | 210.4c | 109.3c | ||||||||||||
Earnings per ADS – basic
|
245.1c | 152.1c | 631.2c | 327.9c | ||||||||||||
Earnings per Ordinary Share – diluted
|
||||||||||||||||
Earnings from continuing operations
|
87.0c | 52.7c | 219.1c | 152.5c | ||||||||||||
Loss from discontinued operations
|
(6.1c) | (3.9c) | (10.8c) | (46.3c) | ||||||||||||
Earnings per Ordinary Share – diluted
|
80.9c | 48.8c | 208.3c | 106.2c | ||||||||||||
Earnings per ADS – diluted
|
242.7c | 146.4c | 624.9c | 318.6c | ||||||||||||
|
||||||||||||||||
|
||||||||||||||||
|
||||||||||||||||
Weighted average number of shares:
|
||||||||||||||||
|
Millions
|
Millions
|
Millions
|
Millions
|
||||||||||||
Basic
|
587.6 | 548.4 | 586.1 | 549.8 | ||||||||||||
Diluted
|
592.6 | 585.7 | 592.1 | 587.5 |
14 |
3 months to September 30,
|
9 months to September 30,
|
|||||||||||||||
2014
|
2013
|
2014
|
2013
|
|||||||||||||
$M | $M | $M | $M | |||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||||||||
|
||||||||||||||||
Net income
|
479.7 | 278.2 | 1,233.2 | 601.1 | ||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||||||||||
Depreciation and amortization
|
106.6 | 78.2 | 307.1 | 229.4 | ||||||||||||
Share based compensation
|
22.6 | 18.8 | 78.3 | 55.2 | ||||||||||||
Change in fair value of contingent consideration
|
4.9 | 14.7 | 26.3 | 28.4 | ||||||||||||
Impairment of intangible assets
|
- | - | 188.0 | 19.9 | ||||||||||||
Goodwill impairment charge
|
- | - | - | 198.9 | ||||||||||||
Write down of assets
|
1.0 | - | 14.0 | 8.3 | ||||||||||||
Gain on sale of product rights
|
(12.4 | ) | (3.6 | ) | (52.6 | ) | (14.6 | ) | ||||||||
Unwind of ViroPharma inventory fair value step-up
|
18.1 | - | 90.6 | - | ||||||||||||
Other, net
|
(1.9 | ) | (2.8 | ) | 16.5 | (3.9 | ) | |||||||||
Movement in deferred taxes
|
37.8 | (5.1 | ) | 63.1 | 16.1 | |||||||||||
Equity in (earnings)/losses of equity method investees
|
(1.4 | ) | 0.3 | (3.8 | ) | (0.6 | ) | |||||||||
Changes in operating assets and liabilities:
|
||||||||||||||||
Increase in accounts receivable
|
(54.8 | ) | (112.6 | ) | (92.1 | ) | (215.2 | ) | ||||||||
(Decrease)/increase in sales deduction accrual
|
(77.8 | ) | 68.7 | 28.2 | 108.7 | |||||||||||
(Increase)/decrease in inventory
|
(4.1 | ) | 14.0 | (15.8 | ) | (39.9 | ) | |||||||||
Decrease/(increase) in prepayments and other assets
|
22.8 | (4.4 | ) | (114.7 | ) | (70.9 | ) | |||||||||
Increase/(decrease) in accounts payable and other liabilities
|
52.3 | 89.3 | (92.8 | ) | (71.4 | ) | ||||||||||
Returns on investment from joint venture
|
- | - | - | 3.2 | ||||||||||||
Net cash provided by operating activities(A)
|
593.4 | 433.7 | 1,673.5 | 852.7 |
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
||||||||||||
|
|
|
|
|||||||||||||
Movements in restricted cash
|
(20.4 | ) | 1.0 | (32.3 | ) | 0.5 | ||||||||||
Purchases of subsidiary undertakings and businesses, net of cash acquired
|
(86.1 | ) | - | (4,104.4 | ) | (227.8 | ) | |||||||||
Purchases of non-current investments
|
(19.7 | ) | (3.1 | ) | (22.8 | ) | (9.9 | ) | ||||||||
Purchases of PP&E
|
(30.7 | ) | (45.3 | ) | (49.8 | ) | (110.3 | ) | ||||||||
Proceeds from short-term investments
|
1.5 | - | 57.8 | - | ||||||||||||
Proceeds from disposal of non-current investments
|
13.3 | 0.9 | 21.3 | 8.6 | ||||||||||||
Proceeds received on sale of product rights
|
69.9 | 4.7 | 122.7 | 15.0 | ||||||||||||
Other, net
|
4.1 | 0.1 | 1.3 | 2.9 | ||||||||||||
Net cash used in investing activities(B)
|
(68.1 | ) | (41.7 | ) | (4,006.2 | ) | (321.0 | ) |
15 |
3 months to September 30,
|
9 months to September 30,
|
|||||||||||||||
2014
|
2013
|
2014
|
2013
|
|||||||||||||
$M | $M | $M | $M | |||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||||||||
|
||||||||||||||||
Proceeds from revolving line of credit, long term and short term borrowings
|
- | - | 2,310.8 | - | ||||||||||||
Repayment of revolving line of credit and short term borrowings
|
(210.2 | ) | - | (1,461.8 | ) | - | ||||||||||
Repayment of debt acquired through business combinations
|
- | - | (551.5 | ) | - | |||||||||||
Proceeds from ViroPharma call options
|
- | - | 346.7 | - | ||||||||||||
Payment of dividend
|
- | - | (99.6 | ) | (79.2 | ) | ||||||||||
Payments to acquire shares by the Employee Benefit Trust ("EBT")
|
- | - | - | (50.3 | ) | |||||||||||
Payments to acquire shares under the share buy-back program
|
- | (12.8 | ) | - | (190.5 | ) | ||||||||||
Excess tax benefit associated with exercise of stock options
|
8.3 | 3.4 | 37.4 | 9.5 | ||||||||||||
Contingent consideration payments
|
(2.5 | ) | (2.5 | ) | (12.8 | ) | (11.3 | ) | ||||||||
Other, net
|
(1.7 | ) | 1.7 | (2.0 | ) | (5.5 | ) | |||||||||
Net cash (used in)/provided by financing activities(C)
|
(206.1 | ) | (10.2 | ) | 567.2 | (327.3 | ) | |||||||||
Effect of foreign exchange rate changes on cash and cash equivalents (D)
|
(5.1 | ) | 2.4 | (6.2 | ) | (0.5 | ) | |||||||||
Net increase/(decrease) in cash and cash equivalents(A) +(B) +(C) +(D)
|
314.1 | 384.2 | (1,771.7 | ) | 203.9 | |||||||||||
Cash and cash equivalents at beginning of period
|
153.6 | 1,301.9 | 2,239.4 | 1,482.2 | ||||||||||||
Cash and cash equivalents at end of period
|
467.7 | 1,686.1 | 467.7 | 1,686.1 |
16 |
3 months to September 30,
|
9 months to September 30,
|
|||||||||||||||
2014
|
2013
|
2014
|
2013
|
|||||||||||||
$M | $M | $M | $M | |||||||||||||
Income from continuing operations
|
515.8 | 301.1 | 1,297.2 | 873.0 | ||||||||||||
Loss from discontinued operations
|
(36.1 | ) | (22.9 | ) | (64.0 | ) | (271.9 | ) | ||||||||
Numerator for basic EPS
|
479.7 | 278.2 | 1,233.2 | 601.1 | ||||||||||||
Interest on convertible bonds, net of tax
|
- | 7.6 | - | 22.7 | ||||||||||||
Numerator for diluted EPS
|
479.7 | 285.8 | 1,233.2 | 623.8 | ||||||||||||
|
||||||||||||||||
Weighted average number of shares:
|
||||||||||||||||
|
Millions
|
Millions
|
Millions
|
Millions
|
||||||||||||
Basic(1)
|
587.6 | 548.4 | 586.1 | 549.8 | ||||||||||||
Effect of dilutive shares:
|
||||||||||||||||
Share based awards to employees(2)
|
5.0 | 3.5 | 6.0 | 3.9 | ||||||||||||
Convertible bonds(3)
|
- | 33.8 | - | 33.8 | ||||||||||||
Diluted
|
592.6 | 585.7 | 592.1 | 587.5 |
(1)
|
Excludes shares purchased by the EBT and under the share buy-back program and presented by Shire as treasury stock.
|
(2)
|
Calculated using the treasury stock method.
|
(3)
|
Calculated using the “if converted” method.
|
3 months to September 30,
|
9 months to September 30,
|
|||||||||||||||
2014
|
2013
|
2014
|
2013
|
|||||||||||||
Millions
|
Millions
|
Millions
|
Millions
|
|||||||||||||
Share based awards to employees(1)
|
0.3 | 0.5 | 0.3 | 4.5 |
(1)
|
Certain stock options have been excluded from the calculation of diluted EPS because (a) their exercise prices exceeded Shire’s average share price during the calculation period or (b) the required performance conditions were not satisfied as at the balance sheet date.
|
17 |
3 months to September 30,
|
2014
|
2013
|
2014
|
2014
|
||||||||||||
|
|
%
|
% of total
|
|||||||||||||
$M | $M |
change
|
revenue
|
|||||||||||||
Net product sales:
|
|
|
||||||||||||||
VYVANSE
|
354.9 | 299.2 | 19 | % | 22 | % | ||||||||||
LIALDA/MEZAVANT
|
176.6 | 141.9 | 24 | % | 11 | % | ||||||||||
ELAPRASE
|
168.8 | 129.1 | 31 | % | 11 | % | ||||||||||
CINRYZE
|
145.1 | - | n/a | 9 | % | |||||||||||
REPLAGAL
|
135.9 | 108.5 | 25 | % | 9 | % | ||||||||||
FIRAZYR
|
98.4 | 62.6 | 57 | % | 6 | % | ||||||||||
INTUNIV
|
96.7 | 80.8 | 20 | % | 6 | % | ||||||||||
VPRIV
|
96.4 | 87.8 | 10 | % | 6 | % | ||||||||||
ADDERALL XR
|
95.3 | 81.4 | 17 | % | 6 | % | ||||||||||
PENTASA
|
78.3 | 70.6 | 11 | % | 5 | % | ||||||||||
FOSRENOL
|
48.1 | 51.9 | -7 | % | 3 | % | ||||||||||
XAGRID
|
27.1 | 24.2 | 12 | % | 2 | % | ||||||||||
Other product sales
|
30.4 | 33.0 | -8 | % | 2 | % | ||||||||||
Total product sales
|
1,552.0 | 1,171.0 | 33 | % | 97 | % | ||||||||||
Royalties:
|
||||||||||||||||
FOSRENOL
|
14.6 | 13.8 | 6 | % |
<1
|
% | ||||||||||
ADDERALL XR
|
9.5 | 6.2 | 53 | % |
<1
|
% | ||||||||||
3TC and ZEFFIX
|
8.8 | 10.1 | -13 | % |
<1
|
% | ||||||||||
Other
|
7.0 | 7.5 | -7 | % |
<1
|
% | ||||||||||
Total royalties
|
39.9 | 37.6 | 6 | % | 2 | % | ||||||||||
Other revenues
|
5.2 | 4.1 | 27 | % |
<1
|
% | ||||||||||
Total revenues
|
1,597.1 | 1,212.7 | 32 | % | 100 | % |
18 |
9 months to September 30,
|
2014
|
2013
|
2014
|
2014
|
||||||||||||
|
|
%
|
% of total
|
|||||||||||||
$M | $M |
change
|
revenue
|
|||||||||||||
Net product sales:
|
|
|
||||||||||||||
VYVANSE
|
1,065.6 | 897.9 | 19 | % | 24 | % | ||||||||||
LIALDA/MEZAVANT
|
449.1 | 379.9 | 18 | % | 10 | % | ||||||||||
ELAPRASE
|
449.5 | 392.6 | 14 | % | 10 | % | ||||||||||
CINRYZE
|
360.6 | - | n/a | 8 | % | |||||||||||
REPLAGAL
|
380.7 | 336.6 | 13 | % | 9 | % | ||||||||||
FIRAZYR
|
262.3 | 153.8 | 71 | % | 6 | % | ||||||||||
INTUNIV
|
279.0 | 248.9 | 12 | % | 6 | % | ||||||||||
VPRIV
|
273.0 | 251.9 | 8 | % | 6 | % | ||||||||||
ADDERALL XR
|
280.2 | 293.5 | -5 | % | 6 | % | ||||||||||
PENTASA
|
213.8 | 215.2 | -1 | % | 5 | % | ||||||||||
FOSRENOL
|
136.2 | 136.3 | 0 | % | 3 | % | ||||||||||
XAGRID
|
82.1 | 74.1 | 11 | % | 2 | % | ||||||||||
Other product sales
|
97.6 | 96.4 | 1 | % | 2 | % | ||||||||||
Total product sales
|
4,329.7 | 3,477.1 | 25 | % | 97 | % | ||||||||||
Royalties:
|
||||||||||||||||
FOSRENOL
|
36.8 | 33.6 | 10 | % | 1 | % | ||||||||||
ADDERALL XR
|
23.0 | 19.2 | 20 | % |
<1
|
% | ||||||||||
3TC and ZEFFIX
|
24.6 | 33.9 | -27 | % | 1 | % | ||||||||||
Other
|
17.0 | 25.7 | -34 | % |
<1
|
% | ||||||||||
Total royalties
|
101.4 | 112.4 | -10 | % | 2 | % | ||||||||||
Other revenues
|
14.9 | 18.8 | -21 | % |
<1
|
% | ||||||||||
Total revenues
|
4,446.0 | 3,608.3 | 23 | % | 100 | % |
19 |
3 months to September 30, 2014
|
US GAAP
|
|
Adjustments
|
|
Non
GAAP
|
||||||
|
|
|
|
|
|
|
|
|
|
||
|
|
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
|
|
|
$M
|
|
$M
|
$M
|
$M
|
$M
|
$M
|
$M
|
|
$M
|
||
Total revenues
|
1,597.1
|
|
-
|
-
|
-
|
-
|
-
|
-
|
|
1,597.1
|
|
|
|
|
|
|
|
|
|
|
|
||
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Cost of product sales
|
254.3
|
|
-
|
(18.1)
|
-
|
-
|
-
|
(16.9)
|
|
219.3
|
|
R&D
|
228.6
|
|
-
|
(12.5)
|
-
|
-
|
-
|
(6.1)
|
|
210.0
|
|
SG&A
|
522.9
|
|
(62.9)
|
-
|
-
|
(3.3)
|
(28.4)
|
(20.7)
|
|
407.6
|
|
Gain on sale of product rights
|
(46.0)
|
|
-
|
-
|
46.0
|
-
|
-
|
-
|
|
-
|
|
Reorganization costs
|
28.2
|
|
-
|
-
|
(28.2)
|
-
|
-
|
-
|
|
-
|
|
Integration and acquisition costs
|
37.1
|
|
-
|
(37.1)
|
-
|
-
|
-
|
-
|
|
-
|
|
Depreciation
|
-
|
|
-
|
-
|
-
|
-
|
-
|
43.7
|
|
43.7
|
|
Total operating expenses
|
1,025.1
|
|
(62.9)
|
(67.7)
|
17.8
|
(3.3)
|
(28.4)
|
-
|
|
880.6
|
|
|
|
|
|
|
|
|
|
|
|
||
Operating income
|
572.0
|
|
62.9
|
67.7
|
(17.8)
|
3.3
|
28.4
|
-
|
|
716.5
|
|
|
|
|
|
|
|
|
|
|
|
||
Interest income
|
3.6
|
|
-
|
-
|
-
|
-
|
(2.8)
|
-
|
|
0.8
|
|
Interest expense
|
(6.8)
|
|
-
|
-
|
-
|
-
|
-
|
-
|
|
(6.8)
|
|
Other expense, net
|
6.8
|
|
-
|
(4.7)
|
(10.8)
|
-
|
-
|
-
|
|
(8.7)
|
|
Total other income/(expense), net
|
3.6
|
|
-
|
(4.7)
|
(10.8)
|
-
|
(2.8)
|
-
|
|
(14.7)
|
|
Income before income taxes and equity in earnings of equity method investees
|
575.6
|
|
62.9
|
63.0
|
(28.6)
|
3.3
|
25.6
|
-
|
|
701.8
|
|
Income taxes
|
(61.2)
|
|
(29.5)
|
(17.9)
|
13.9
|
(1.2)
|
(27.7)
|
-
|
|
(123.6)
|
|
Equity in earnings of equity method investees, net of tax
|
1.4
|
|
-
|
-
|
-
|
-
|
-
|
-
|
|
1.4
|
|
Net income from continuing operations
|
515.8
|
|
33.4
|
45.1
|
(14.7)
|
2.1
|
(2.1)
|
-
|
|
579.6
|
|
Loss from discontinued operations, net of tax
|
(36.1)
|
|
-
|
-
|
36.1
|
-
|
-
|
-
|
|
-
|
|
Net income
|
479.7
|
|
33.4
|
45.1
|
21.4
|
2.1
|
(2.1)
|
-
|
|
579.6
|
|
Weighted average number of shares (millions) – diluted
|
592.6
|
|
-
|
-
|
-
|
-
|
-
|
-
|
|
592.6
|
|
Diluted earnings per ADS
|
242.7c
|
|
16.9c
|
22.9c
|
10.9c
|
1.2c
|
(1.2c)
|
-
|
|
293.4c
|
(a)
|
Amortization and asset impairments: Amortization of intangible assets relating to intellectual property rights acquired ($62.9 million), and tax effect of adjustments;
|
(b)
|
Acquisition and integration activities: Unwind of ViroPharma inventory fair value adjustments ($18.1 million), payments in respect of in-licensed and acquired products ($12.5 million), costs primarily associated with the acquisition and integration of ViroPharma ($32.2 million), net charge related to the change in fair value of contingent consideration liabilities ($4.9 million), gain on settlement of pre-existing relationship with an acquired business ($4.7 million), and tax effect of adjustments;
|
(c)
|
Divestments, reorganizations and discontinued operations: Net gain on divestment of non-core product rights and on re-measurement of DAYTRANA contingent consideration to fair value ($46.0 million), costs relating to the One Shire reorganization ($28.2 million), gain on sale of long term investments ($10.8 million), tax effect of adjustments, and loss from discontinued operations, net of tax ($36.1 million);
|
(d)
|
Legal and litigation costs: Costs related to litigation, government investigations, other disputes and external legal costs ($3.3 million), and tax effect of adjustments;
|
(e)
|
Other: Costs associated with AbbVie’s terminated offer for Shire ($28.4 million), interest income received in respect of cash deposited with the Canadian revenue authorities ($2.8 million), net income tax credit related to the settlement of certain tax positions with the Canadian revenue authorities ($27.7 million), and tax effect of adjustments; and
|
(f)
|
Depreciation reclassification: Depreciation of $43.7 million included in Cost of product sales, R&D and SG&A for US GAAP separately disclosed for the presentation of Non GAAP earnings.
|
20 |
3 months to September 30, 2013
|
US GAAP
|
|
Adjustments
|
|
Non
GAAP
|
|||||
|
|
|
|
|
|
|
|
|
||
|
|
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
|
|
|
$M
|
|
$M
|
$M
|
$M
|
$M
|
$M
|
|
$M
|
||
Total revenues
|
1,212.7
|
|
-
|
-
|
-
|
-
|
-
|
|
1,212.7
|
|
|
|
|
|
|
|
|
|
|
||
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
Cost of product sales
|
180.5
|
|
-
|
-
|
-
|
-
|
(10.2)
|
|
170.3
|
|
R&D
|
226.2
|
|
-
|
-
|
-
|
-
|
(6.3)
|
|
219.9
|
|
SG&A
|
396.3
|
|
(34.5)
|
-
|
-
|
(4.7)
|
(15.9)
|
|
341.2
|
|
Gain on sale of product rights
|
(3.6)
|
|
-
|
-
|
3.6
|
-
|
-
|
|
-
|
|
Reorganization costs
|
12.0
|
|
-
|
-
|
(12.0)
|
-
|
-
|
|
-
|
|
Integration and acquisition costs
|
18.4
|
|
-
|
(18.4)
|
-
|
-
|
-
|
|
-
|
|
Depreciation
|
-
|
|
-
|
-
|
-
|
-
|
32.4
|
|
32.4
|
|
Total operating expenses
|
829.8
|
|
(34.5)
|
(18.4)
|
(8.4)
|
(4.7)
|
-
|
|
763.8
|
|
|
|
|
|
|
|
|
|
|
||
Operating income
|
382.9
|
|
34.5
|
18.4
|
8.4
|
4.7
|
-
|
|
448.9
|
|
|
|
|
|
|
|
|
|
|
||
Interest income
|
0.4
|
|
-
|
-
|
-
|
-
|
-
|
|
0.4
|
|
Interest expense
|
(9.2)
|
|
-
|
-
|
-
|
-
|
-
|
|
(9.2)
|
|
Other expense, net
|
0.7
|
|
-
|
-
|
-
|
-
|
-
|
|
0.7
|
|
Total other expense, net
|
(8.1)
|
|
-
|
-
|
-
|
-
|
-
|
|
(8.1)
|
|
Income before income taxes and equity in losses of equity method investees
|
374.8
|
|
34.5
|
18.4
|
8.4
|
4.7
|
-
|
|
440.8
|
|
Income taxes
|
(73.4)
|
|
(10.5)
|
(1.0)
|
(3.6)
|
(1.8)
|
-
|
|
(90.3)
|
|
Equity in losses of equity method investees, net of tax
|
(0.3)
|
|
-
|
-
|
-
|
-
|
-
|
|
(0.3)
|
|
Income from continuing operations
|
301.1
|
|
24.0
|
17.4
|
4.8
|
2.9
|
-
|
|
350.2
|
|
Loss from discontinued operations, net of tax
|
(22.9)
|
|
-
|
-
|
22.9
|
-
|
-
|
|
-
|
|
Net income
|
278.2
|
|
24.0
|
17.4
|
27.7
|
2.9
|
-
|
|
350.2
|
|
Impact of convertible debt, net of tax
|
7.6
|
|
-
|
-
|
-
|
-
|
-
|
|
7.6
|
|
Numerator for diluted EPS
|
285.8
|
|
24.0
|
17.4
|
27.7
|
2.9
|
-
|
|
357.8
|
|
Weighted average number of shares (millions) – diluted
|
585.7
|
|
-
|
-
|
-
|
-
|
-
|
|
585.7
|
|
Diluted earnings per ADS
|
146.4c
|
|
12.3c
|
8.9c
|
14.2c
|
1.5c
|
-
|
|
183.3c
|
(a)
|
Amortization and asset impairments: Amortization of intangible assets relating to intellectual property rights acquired ($34.5 million), and tax effect of adjustments;
|
(b)
|
Acquisition and integration activities: Costs primarily associated with the integration of SARcode and Premacure ($3.8 million), charges related to the change in fair values of contingent consideration liabilities ($14.6 million), and tax effect of adjustments;
|
(c)
|
Divestments, reorganizations and discontinued operations: Gain on re-measurement of DAYTRANA contingent consideration to fair value ($3.6 million), costs relating to the One Shire reorganization and the collective dismissal and closure of Shire’s facility at Turnhout, Belgium ($12.0 million), tax effect of adjustments, and loss from discontinued operations, net of tax ($22.9 million);
|
(d)
|
Legal and litigation costs: Costs related to litigation, government investigations, other disputes and external legal costs ($4.7 million), and tax effect of adjustments; and
|
(e)
|
Depreciation reclassification: Depreciation of $32.4 million included in Cost of product sales, R&D and SG&A for US GAAP separately disclosed for the presentation of Non GAAP earnings.
|
21 |
9 months to September 30, 2014
|
US GAAP
|
|
Adjustments
|
|
Non
GAAP
|
||||||
|
|
|
|
|
|
|
|
|
|
||
|
|
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
|
|
|
$M
|
|
$M
|
$M
|
$M
|
$M
|
$M
|
$M
|
|
$M
|
||
Total revenues
|
4,446.0
|
|
-
|
-
|
-
|
-
|
-
|
-
|
|
4,446.0
|
|
|
|
|
|
|
|
|
|
|
|
||
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Cost of product sales
|
760.8
|
|
-
|
(90.6)
|
-
|
-
|
-
|
(44.9)
|
|
625.3
|
|
R&D
|
826.0
|
|
(188.0)
|
(12.5)
|
-
|
-
|
-
|
(17.7)
|
|
607.8
|
|
SG&A
|
1,449.4
|
|
(181.9)
|
-
|
-
|
(7.2)
|
(47.5)
|
(62.6)
|
|
1,150.2
|
|
Gain on sale of product rights
|
(86.2)
|
|
-
|
-
|
86.2
|
-
|
-
|
-
|
|
-
|
|
Reorganization costs
|
123.4
|
|
-
|
-
|
(123.4)
|
-
|
-
|
-
|
|
-
|
|
Integration and acquisition costs
|
155.8
|
|
-
|
(155.8)
|
-
|
-
|
-
|
-
|
|
-
|
|
Depreciation
|
-
|
|
-
|
-
|
-
|
-
|
-
|
125.2
|
|
125.2
|
|
Total operating expenses
|
3,229.2
|
|
(369.9)
|
(258.9)
|
(37.2)
|
(7.2)
|
(47.5)
|
-
|
|
2,508.5
|
|
|
|
|
|
|
|
|
|
|
|
||
Operating income
|
1,216.8
|
|
369.9
|
258.9
|
37.2
|
7.2
|
47.5
|
-
|
|
1,937.5
|
|
|
|
|
|
|
|
|
|
|
|
||
Interest income
|
22.8
|
|
-
|
-
|
-
|
-
|
(21.4)
|
-
|
|
1.4
|
|
Interest expense
|
(25.7)
|
|
-
|
-
|
-
|
-
|
-
|
-
|
|
(25.7)
|
|
Other income/(expense), net
|
14.8
|
|
-
|
(4.7)
|
(15.8)
|
-
|
-
|
-
|
|
(5.7)
|
|
Total other income/(expense), net
|
11.9
|
|
-
|
(4.7)
|
(15.8)
|
-
|
(21.4)
|
-
|
|
(30.0)
|
|
Income before income taxes and equity in earnings of equity method investees
|
1,228.7
|
|
369.9
|
254.2
|
21.4
|
7.2
|
26.1
|
-
|
|
1,907.5
|
|
Income taxes
|
64.7
|
|
(105.5)
|
(43.4)
|
(11.5)
|
(2.6)
|
(243.7)
|
-
|
|
(342.0)
|
|
Equity in earnings of equity method investees, net of tax
|
3.8
|
|
-
|
-
|
-
|
-
|
-
|
-
|
|
3.8
|
|
Income from continuing operations
|
1,297.2
|
|
264.4
|
210.8
|
9.9
|
4.6
|
(217.6)
|
-
|
|
1,569.3
|
|
Loss from discontinued operations, net of tax
|
(64.0)
|
|
-
|
-
|
64.0
|
-
|
-
|
-
|
|
-
|
|
Net income
|
1,233.2
|
|
264.4
|
210.8
|
73.9
|
4.6
|
(217.6)
|
-
|
|
1,569.3
|
|
Weighted average number of shares (millions) – diluted
|
592.1
|
|
-
|
-
|
-
|
-
|
-
|
-
|
|
592.1
|
|
Diluted earnings per ADS
|
624.9c
|
|
134.0c
|
106.7c
|
37.4c
|
2.4c
|
(110.4c)
|
-
|
|
795.0c
|
(a)
|
Amortization and asset impairments: Impairment of IPR&D intangible assets ($188.0 million), amortization of intangible assets relating to intellectual property rights acquired ($181.9 million), and tax effect of adjustments;
|
(b)
|
Acquisitions and integration activities: Unwind of ViroPharma inventory fair value adjustments ($90.6 million), payments in respect of in-licensed and acquired products ($12.5 million), costs primarily associated with the acquisition and integration of ViroPharma ($129.5 million), net charge related to the change in fair values of contingent consideration liabilities ($26.3 million), gain on settlement of pre-existing relationship with an acquired business ($4.7 million), and tax effect of adjustments;
|
(c)
|
Divestments, reorganizations and discontinued operations: Net gain on divestment of non-core product rights and on re-measurement of DAYTRANA contingent consideration to fair value ($86.2 million), costs relating to the One Shire reorganization ($123.4 million), gain on sale of long term investments ($15.8 million), tax effect of adjustments and loss from discontinued operations, net of tax ($64.0 million);
|
(d)
|
Legal and litigation costs: Costs related to litigation, government investigations, other disputes and external legal costs ($7.2 million), and tax effect of adjustments;
|
(e)
|
Other: Costs associated with AbbVie’s terminated offer for Shire ($47.5 million), interest income received in respect of cash deposited with the Canadian revenue authorities ($21.4 million), net income tax credit related to the settlement of certain tax positions with the Canadian revenue authorities ($243.7 million), and tax effect of adjustment; and
|
(f)
|
Depreciation reclassification: Depreciation of $125.2 million included in Cost of product sales, R&D and SG&A for US GAAP separately disclosed for the presentation of Non GAAP earnings.
|
22 |
9 months to September 30, 2013
|
US GAAP
|
|
Adjustments
|
|
Non
GAAP
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
|
|
$M
|
|
$M
|
$M
|
$M
|
$M
|
$M
|
|
$M
|
|
Total revenues
|
3,608.3
|
|
-
|
-
|
-
|
-
|
-
|
|
3,608.3
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
Cost of product sales
|
492.2
|
|
-
|
-
|
-
|
-
|
(26.5)
|
|
465.7
|
R&D
|
703.3
|
|
(19.9)
|
-
|
-
|
-
|
(15.2)
|
|
668.2
|
SG&A
|
1,198.0
|
|
(106.5)
|
-
|
-
|
(8.1)
|
(47.6)
|
|
1,035.8
|
Goodwill impairment charge
|
7.1
|
|
(7.1)
|
-
|
-
|
-
|
-
|
|
-
|
Gain on sale of product rights
|
(14.6)
|
|
-
|
-
|
14.6
|
-
|
-
|
|
-
|
Reorganization costs
|
47.2
|
|
-
|
-
|
(47.2)
|
-
|
-
|
|
-
|
Integration and acquisition costs
|
39.9
|
|
-
|
(39.9)
|
-
|
-
|
-
|
|
-
|
Depreciation
|
-
|
|
-
|
-
|
-
|
-
|
89.3
|
|
89.3
|
Total operating expenses
|
2,473.1
|
|
(133.5)
|
(39.9)
|
(32.6)
|
(8.1)
|
-
|
|
2,259.0
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
1,135.2
|
|
133.5
|
39.9
|
32.6
|
8.1
|
-
|
|
1,349.3
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
1.6
|
|
-
|
-
|
-
|
-
|
-
|
|
1.6
|
Interest expense
|
(27.5)
|
|
-
|
-
|
-
|
-
|
-
|
|
(27.5)
|
Other expense, net
|
(1.6)
|
|
-
|
-
|
-
|
-
|
-
|
|
(1.6)
|
Total other expense, net
|
(27.5)
|
|
-
|
-
|
-
|
-
|
-
|
|
(27.5)
|
Income before income taxes and equity in earnings of equity method investees
|
1,107.7
|
|
133.5
|
39.9
|
32.6
|
8.1
|
-
|
|
1,321.8
|
Income taxes
|
(235.3)
|
|
(32.4)
|
(3.1)
|
(9.4)
|
(3.1)
|
-
|
|
(283.3)
|
Equity in earnings of equity method investees, net of tax
|
0.6
|
|
-
|
-
|
-
|
-
|
-
|
|
0.6
|
Income from continuing operations
|
873.0
|
|
101.1
|
36.8
|
23.2
|
5.0
|
-
|
|
1,039.1
|
Loss from discontinued operations, net of tax
|
(271.9)
|
|
-
|
-
|
271.9
|
-
|
-
|
|
-
|
Net income
|
601.1
|
|
101.1
|
36.8
|
295.1
|
5.0
|
-
|
|
1,039.1
|
Impact of convertible debt, net of tax
|
22.7
|
|
-
|
-
|
-
|
-
|
-
|
|
22.7
|
Numerator for diluted EPS
|
623.8
|
|
101.1
|
36.8
|
295.1
|
5.0
|
-
|
|
1,061.8
|
Weighted average number of shares (millions) – diluted
|
587.5
|
|
-
|
-
|
-
|
-
|
-
|
|
587.5
|
Diluted earnings per ADS
|
318.6c
|
|
51.6c
|
18.8c
|
150.6c
|
2.5c
|
-
|
|
542.1c
|
(a)
|
Amortization and asset impairments: Impairment of IPR&D intangible assets acquired with Movetis ($19.9 million), impairment of goodwill relating to Shire’s Regenerative Medicine Business relating to continuing operations ($7.1 million), amortization of intangible assets relating to intellectual property rights acquired ($106.5 million), and tax effect of adjustments;
|
(b)
|
Acquisitions and integration activities: Costs primarily associated with the acquisition of SARcode, Lotus Tissue Repair, Inc. and Premacure ($11.5 million), charges related to the change in fair values of contingent consideration liabilities ($28.4 million), and tax effect of adjustments;
|
(c)
|
Divestments, reorganizations and discontinued operations: Re-measurement of DAYTRANA contingent consideration to higher fair value ($14.6 million), costs relating to the One Shire reorganization and the collective dismissal and closure of Shire’s facility at Turnhout, Belgium ($47.2 million), tax effect of adjustments, and loss from discontinued operations, net of tax ($271.9 million);
|
(d)
|
Legal and litigation costs: Costs related to litigation, government investigations, other disputes and external legal costs ($8.1 million), and tax effect of adjustments; and
|
(e)
|
Depreciation reclassification: Depreciation of $89.3 million included in Cost of product sales, R&D and SG&A for US GAAP separately disclosed for the presentation of Non GAAP earnings.
|
23 |
3 months to September 30,
|
9 months to September 30,
|
|||||||||||||||
2014
|
2013
|
2014
|
2013
|
|||||||||||||
$M | $M | $M | $M | |||||||||||||
US GAAP Net Income
|
479.7 | 278.2 | 1,233.2 | 601.1 | ||||||||||||
(Deduct) / add back:
|
||||||||||||||||
Loss from discontinued operations, net of tax
|
36.1 | 22.9 | 64.0 | 271.9 | ||||||||||||
Equity in (earnings)/losses of equity method investees, net of taxes
|
(1.4 | ) | 0.3 | (3.8 | ) | (0.6 | ) | |||||||||
Income taxes
|
61.2 | 73.4 | (64.7 | ) | 235.3 | |||||||||||
Other expense/ (income), net
|
(6.8 | ) | (0.7 | ) | (14.8 | ) | 1.6 | |||||||||
Interest expense
|
6.8 | 9.2 | 25.7 | 27.5 | ||||||||||||
Interest income
|
(3.6 | ) | (0.4 | ) | (22.8 | ) | (1.6 | ) | ||||||||
US GAAP Operating income from continuing operations
|
572.0 | 382.9 | 1,216.8 | 1,135.2 | ||||||||||||
Amortization
|
62.9 | 34.5 | 181.9 | 106.5 | ||||||||||||
Depreciation
|
43.7 | 32.4 | 125.2 | 89.3 | ||||||||||||
Asset impairments
|
- | - | 188.0 | 27.0 | ||||||||||||
Acquisition and integration activities
|
67.7 | 18.4 | 258.9 | 39.9 | ||||||||||||
Divestments, reorganizations and discontinued operations
|
(17.8 | ) | 8.4 | 37.2 | 32.6 | |||||||||||
Legal and litigation costs
|
3.3 | 4.7 | 7.2 | 8.1 | ||||||||||||
Other
|
28.4 | - | 47.5 | - | ||||||||||||
Non GAAP EBITDA
|
760.2 | 481.3 | 2,062.7 | 1,438.6 | ||||||||||||
Depreciation
|
(43.7 | ) | (32.4 | ) | (125.2 | ) | (89.3 | ) | ||||||||
Non GAAP Operating income from continuing operations
|
716.5 | 448.9 | 1,937.5 | 1,349.3 | ||||||||||||
Net income margin(1)
|
30 | % | 23 | % | 28 | % | 17 | % | ||||||||
Non GAAP EBITDA margin(2)
|
46 | % | 38 | % | 45 | % | 38 | % |
24 |
|
3 months to September 30,
|
9 months to September 30,
|
||||||||||||||
|
2014
|
2013
|
2014
|
2013
|
||||||||||||
|
$M | $M | $M | $M | ||||||||||||
Net cash provided by operating activities
|
593.4 | 433.7 | 1,673.5 | 852.7 | ||||||||||||
Tax and interest payments, net
|
5.9 | 48.1 | 163.7 | 260.6 | ||||||||||||
Receipt from the Canadian revenue authorities
|
- | - | (248.0 | ) | - | |||||||||||
Up-front payments in respect of in-licensed and acquired products
|
12.5 | - | 12.5 | - | ||||||||||||
Non GAAP cash generation
|
611.8 | 481.8 | 1,601.7 | 1,113.3 |
3 months to September 30,
|
9 months to September 30,
|
|||||||||||||||
2014
|
2013
|
2014
|
2013
|
|||||||||||||
$M | $M | $M | $M | |||||||||||||
Net cash provided by operating activities
|
593.4 | 433.7 | 1,673.5 | 852.7 | ||||||||||||
Up-front payments in respect of in-licensed and acquired products
|
12.5 | - | 12.5 | - | ||||||||||||
Capital expenditure
|
(30.7 | ) | (45.3 | ) | (49.8 | ) | (110.3 | ) | ||||||||
Non GAAP free cash flow
|
575.2 | 388.4 | 1,636.2 | 742.4 |
|
September 30,
|
December 31,
|
||||||
|
2014
|
2013
|
||||||
|
$M | $M | ||||||
Cash and cash equivalents
|
467.7 | 2,239.4 | ||||||
|
||||||||
Long term borrowings
|
(850.0 | ) | - | |||||
Other debt
|
(14.0 | ) | (8.9 | ) | ||||
Non GAAP net (debt)/cash
|
(396.3 | ) | 2,230.5 |
25 |
·
|
Shire’s products may not be a commercial success;
|
·
|
revenues from ADDERALL XR are subject to generic erosion and revenues from INTUNIV will become subject to generic competition starting in December 2014;
|
·
|
the failure to obtain and maintain reimbursement, or an adequate level of reimbursement, by third-party payors in a timely manner for Shire's products may impact future revenues, financial condition and results of operations;
|
·
|
Shire conducts its own manufacturing operations for certain of its products and is reliant on third party contractors to manufacture other products and to provide goods and services. Some of Shire’s products or ingredients are only available from a single approved source for manufacture. Any disruption to the supply chain for any of Shire’s products may result in Shire being unable to continue marketing or developing a product or may result in Shire being unable to do so on a commercially viable basis for some period of time.
|
·
|
the development, approval and manufacturing of Shire’s products is subject to extensive oversight by various regulatory agencies. Submission of an application for regulatory approval of any of our product candidates, such as our planned submission of a New Drug Application to the FDA for lifitegrast as a treatment for the signs and symptoms of dry eye disease in adults, may be delayed for any number of reasons and, once submitted, may be subjected to lengthy review and ultimately rejected. Moreover, regulatory approvals or interventions associated with changes to manufacturing sites, ingredients or manufacturing processes could lead to significant delays, increase in operating costs, lost product sales, an interruption of research activities or the delay of new product launches;
|
·
|
the actions of certain customers could affect Shire's ability to sell or market products profitably. Fluctuations in buying or distribution patterns by such customers can adversely impact Shire’s revenues, financial conditions or results of operations;
|
·
|
investigations or enforcement action by regulatory authorities or law enforcement agencies relating to Shire’s activities in the highly regulated markets in which it operates may result in the distraction of senior management, significant legal costs and the payment of substantial compensation or fines;
|
·
|
adverse outcomes in legal matters and other disputes, including Shire’s ability to enforce and defend patents and other intellectual property rights required for its business, could have a material adverse effect on Shire’s revenues, financial condition or results of operations;
|
·
|
Shire faces intense competition for highly qualified personnel from other companies, academic institutions, government entities and other organizations. Shire is undergoing a corporate reorganization and the consequent uncertainty could adversely impact Shire’s ability to attract and/or retain the highly skilled personnel needed for Shire to meet its strategic objectives;
|
·
|
failure to achieve Shire’s strategic objectives with respect to the acquisition of ViroPharma Incorporated may adversely affect Shire’s financial condition and results of operations;
|
26 |
·
|
Intangible asset amortization and impairment charges; and
|
·
|
Other than temporary impairment of investments.
|
·
|
Up-front payments and milestones in respect of in-licensed and acquired products;
|
·
|
Costs associated with acquisitions, including transaction costs, fair value adjustments on contingent consideration and acquired inventory;
|
·
|
Costs associated with the integration of companies; and
|
·
|
Noncontrolling interests in consolidated variable interest entities.
|
·
|
Gains and losses on the sale of non-core assets;
|
·
|
Costs associated with restructuring and reorganization activities;
|
·
|
Termination costs; and
|
·
|
Income/(losses) from discontinued operations.
|
·
|
Net legal costs related to the settlement of litigation, government investigations and other disputes (excluding internal legal team costs).
|
·
|
Net income tax credit (being income tax, interest and estimated penalties) related to the settlement of certain tax positions with the Canadian revenue authorities.
|
·
|
Costs associated with AbbVie’s terminated offer for Shire.
|
27 |
28 |